SMM News: content summary
In terms of international precious metals, the trend of precious metals was divided last week, gold and silver performed weakly, palladium basically closed flat, only platinum rose sharply. On Monday, it was reported that the effectiveness of Moderna reached 94.5%, and gold fell more than $20; the dollar index fluctuated downwards and closed slightly lower, supporting gold's rebound in the second half of the week. On the investment demand side, gold ETF SPDR positions continued to flow out 14 tons last week, increasing its holdings by 3 tons last Friday, and the rate of reduction slowed down. Inflation expectations triggered by the Fed's promised ultra-loose monetary policy environment and eventual fiscal stimulus will support gold prices in the medium to long term. Gold is currently supported on the front line of US $1860. Before the introduction of fiscal stimulus, there is a lack of obvious factors to push gold out of the trend, which is expected to be dominated by range shocks in the short term.
The overall performance of base metals is strong. Since mid-March this year, driven by the improvement in global macro expectations and strong demand expectations in China, the non-ferrous metals sector has rebounded sharply from before the outbreak at the beginning of the year, but after the market information has been digested, whether the non-ferrous sector can rise again and break through the previous high or wait until the fundamentals are clearer. Lun Copper performed strongly, hitting its highest level since mid-June 2018 on Friday. The overall operation logic of the copper market has not changed significantly than before, and it is mainly driven by macro factors, and copper prices may rise further due to mine interference in the short term, but in the current volatile market environment, we still need to pay attention to the potential political risks. It is suggested that we should wait and see instead of chasing higher.
On the energy side, oil prices closed higher for the third week in a row, boosted by good vaccine news and the postponement of OPEC+ production plans. The novel coronavirus vaccine developed by many pharmaceutical companies is effective and good in the medium term while the lack of terminal demand caused by the epidemic is still the main contradiction restricting the rise of oil prices. On the supply side, the recovery of Libyan crude oil supply far exceeded market expectations, OPEC+ was ready to take action if necessary, and there were signs of instability within OPEC, and the dispute between the United Arab Emirates and OPEC could weaken OPEC's influence. On the spot side, recently, the replenishment of crude oil in the Asia-Pacific region has increased significantly. China, India, Japan and other countries are all increasing the purchase of crude oil. At present, the sales of crude oil in the spot market are good. The international crude oil market will play a game between strong expectation and weak reality, and the high probability of oil price will remain volatile.
01 precious metal market
Last week, the trend of precious metals was divided, gold and silver performed weakly, palladium basically closed flat, only platinum rose sharply. Gold fell from a high of $1889 last week, hitting as low as $1852 before closing at $1871. Silver was similar to gold, opening at $24.69, dipping as low as $23.64 and closing at $24.18. Palladium opened at $2330, peaked at $2380 in the middle of the week, hit as low as $2275 and closed at $2329. Platinum outperformed itself, rising all the way from $896 to closing at $950, up 6% that week.
Last Monday, it was reported that the effectiveness of Moderna reached 94.5%, and gold fell more than $20, but it was significantly weaker than the decline in Pfizer's announcement of vaccine effectiveness. In contrast to the optimism about the vaccine, the epidemic has intensified, with 58.98 million confirmed cases worldwide and 138000 confirmed in the United States in a single day, a situation that IMF warned could curb economic recovery. The adverse circumstances of the epidemic almost offset the optimism brought by the vaccine. Similarly, there are mixed economic data in the US, where industrial production and housing starts were better than expected last week, but jobless claims rose unexpectedly, raising fears that the recovery would slow. The dollar index fluctuated downwards last week, closing slightly lower, supporting gold's rebound in the second half of the week.
On the investment demand side, gold ETF SPDR positions continued to flow out 14 tons last week, increasing its holdings by 3 tons last Friday, and the rate of reduction slowed down. CFTC speculative net long positions increased by 11534 hands, after this round of pullback, some bulls returned to the market.
At present, the focus of market attention is on the stimulus package. Last week, the Treasury Secretary asked the Federal Reserve to return unused funds in emergency loans, and the Treasury called for the end of the emergency loan program by the end of the year. Federal Reserve Chairman Colin Powell said he would refund unused funds from five emergency loan facilities as required. But the Fed does not think it is appropriate to withdraw its emergency loan program by the end of the year. Although the market is less likely to launch fiscal stimulus in the short term, as the Treasury Secretary says he will try to restart stimulus package negotiations, the Treasury and the Federal Reserve also have sufficient "ammunition" to support the US economy. The Fed's promised ultra-loose monetary policy environment and inflation expectations triggered by the eventual fiscal stimulus will support gold prices in the medium to long term.
In the short term, gold is currently supported at the front line of US $1860. Before the introduction of the fiscal stimulus policy, there is a lack of obvious factors to push gold out of the trend, which is expected to be dominated by range shocks in the short term, ranging from US $1820 to US $1930.
02 basic metal market
Last week, the overall performance of the non-ferrous metals sector was strong. Lun lead led a rise of 6.37% to reach the year's high of US $2030 / ton, while other varieties rose to varying degrees. Lunzn Zinc, Lunchen Copper, Lunxi Copper and Lunxi Nickel rose 6.06%, 3.73%, 2.82%, 1.63% and 1.29%, respectively. All varieties reached highs for the year, and Lun Copper reached its highest point since mid-June 2018. The London metal futures index (LMEX INDEX) is up 4.04 per cent from last week.
Since mid-March this year, driven by improving global macro expectations and strong demand expectations in China, the non-ferrous metals sector has rebounded sharply from before the outbreak at the beginning of the year, especially Lun Copper, a barometer of the world economy. the standard three-month contract has risen by more than 25 per cent since the end of January and has fluctuated at a high range of US $6900 to US $7200 per tonne in the past two weeks. From the recent overall operation of the non-ferrous plate, we can find that the varieties are basically rising alternately, it can be seen that the macro market sentiment is still relatively optimistic, superimposed downstream demand is expected to be better, the whole plate is expected to continue to maintain a relatively strong pattern.
On the macro level, the US presidential election is basically a foregone conclusion, market uncertainty has declined, and after eight years of successful signing of the world's largest trade agreement, RCEP, multilateral trade expectations have risen and market sentiment has been boosted. The two parties in the United States have agreed to return to negotiations on a new round of fiscal stimulus, but there is still some way to go before the specific stimulus bill is expected to be reached until January next year. On the data side, the number of Americans receiving unemployment benefits rebounded again in the week ended November 14. Although new housing starts and existing home sales were better than previous values and expectations in October, retail sales were weaker than the previous month. In addition, China's macroeconomic data performed well in October. Industrial value added above scale increased by 6.9% compared with the same period last year. Fixed asset investment increased by 1.8% in the first 10 months, and retail sales growth accelerated to 4.3% from 3.3% at the end of September. The domestic recovery is strong, and the non-ferrous sector has risen sharply.
In terms of the epidemic, according to the data of the Worldometer website, as of 06:30 on November 22nd, there were a total of 58.44 million confirmed cases and 1.38 million deaths worldwide, with more than 10,000 confirmed cases in 116 countries and regions. At present, the highest number of new confirmed cases of the global epidemic in a single day has exceeded 650000, and that in the United States has also exceeded 190000 in a single day, and the number of cases continues to increase at an alarming rate, with no obvious sign of abating. Although the vaccine good news gives the market continued confidence, it is easy for confirmed cases to continue to grow rapidly as winter progresses in the northern hemisphere and holidays approach. World Health Organization (WHO) said the vaccine has not yet been officially launched and mass vaccination is expected to take at least four to six months. It is difficult to predict how the epidemic will develop in the next four months, and it may be difficult to say that there will be a larger blockade, which will cause greater disruption to both supply and demand in the non-ferrous sector. In short, both economic data and vaccine progress are constantly pushing up the non-ferrous market. Pfizer's application to speed up the launch of the vaccine on Friday is more like injecting a shot in the arm into the market, but after the market information has been digested, whether the non-ferrous sector can rise again, rise before the breakthrough, or wait until the fundamentals are clearer can be judged.
[copper]
Lun Copper was strongly spurred by multiple positives last week, closing at $7261 a tonne on Friday, hitting a peak of $7294.50 a tonne for the day to its highest level since mid-June 2018.
On the supply side, mine-side news was dull last week, but a level 6.1 Earthquake occurred in central Chile on Sunday, according to SMM, which may add interference to subsequent mine-side supply. In the near future, the market has focused on the TC long order negotiations early next month, considering that spot TC was once maintained at a level of less than $50 per tonne, coupled with the persistence of mine-side interference, annual TC pricing is not expected to be higher than this year. Earlier, both Chile and Peru reported copper production in September, of which Peruvian production declined, but Chile's performance was very stable, indicating that the impact of the epidemic on mine-side supply was not as great as expected. Although the copper price continues to rise, the domestic fine waste price gap is relatively stable, mainly affected by the shortage of import supply and the continuous decline of hidden inventory.
Unlike supply, the epidemic has had a more long-term impact on demand. At present, with the exception of China, other countries and regions do not see any trend of demand in the short term, which is expected to be good in the longer term. Although the domestic spot market Jinjiu Silver Ten is not buoyant in peak season, according to SMM, copper orders in November improved slightly from the previous month, and cable orders also showed signs of improvement, but not obvious.
Exchange data, LME down 7900 tons, SHFE down 21200 tons, COMEX fell 900 tons, coupled with an increase of 2800 tons in the bonded area, global inventories of the four places fell 27100 tons compared with last week, supporting copper prices. In addition, the speculative net bulls of COMEX copper are still at a two-year high, and the forward curve and spot rally have not changed significantly compared with 3 months.
Generally speaking, the overall operation logic of the copper market has not changed significantly compared with before, and it is mainly driven by macro factors. One is when and how the vaccine can be put into large-scale use, and the other is when and how the US fiscal stimulus policy will be launched and the specific contents of the European stimulus plan at the end of the year. Copper prices may rise further in the short term due to mine interference, but in the current volatile market environment, we still need to pay attention to the potential political risks. It is suggested that we should wait and see instead of chasing high.
03 energy market Last week, the international crude oil market closed higher for the third consecutive week, boosted by good news for vaccines and the postponement of OPEC+ production plans. However, with the deterioration of the epidemic, many countries in Europe and the United States have tightened epidemic prevention measures, resulting in limited upward space for oil prices. Brent and WTI crude rose 6.12% and 5.11% to $45.24 and $42.17, respectively, from the previous week.
The novel coronavirus vaccine developed by a number of pharmaceutical companies has a remarkable effect which constitutes a good medium-term and brings strong support to the oil price. Pfizer formally submitted a request for emergency use authorization for the vaccine to the FDA last week, following the good news that the vaccine was 90% effective. Pfizer said it would prepare to distribute the vaccine within hours of licensing and expects to produce as many as 50 million doses worldwide by 2020 and 1.3 billion doses by the end of 2021. Moderna, another American pharmaceutical company, also announced last Monday that its vaccine was more than 94.5% effective, and it plans to apply for a license from FDA later this month. Fauci, director of the National Institute of Allergy and Infectious Diseases, said Americans are likely to be vaccinated as early as the end of December. At the same time, the vaccine developed by AstraZeneca and the University of Oxford has produced a strong immune response in the elderly, and the researchers are expected to release the results of later trials before Christmas. Once the vaccine is fully operational, the global economy is expected to recover more quickly and will fundamentally boost the outlook for crude oil demand.
The lack of terminal demand caused by the epidemic is still the main contradiction restricting the rise of oil prices. In the US, California has imposed a 10:00 curfew on 94 per cent of the state's population; an one-month ban on non-essential travel along the US-Canada and Mexico land borders has been extended to December 21; and the rolling average of seven-day test positives in New York City reached the safety threshold of 3 per cent, triggering the closure of the school system and reviving concerns about the blockade. In Europe, the second multinational blockade is approaching, but many governments have hinted that if the epidemic is not effectively contained, the blockade will be extended. Although the implementation of the city closure by the people in Europe and the United States has obviously released water, and the crackdown on crude oil demand is not as strong as it used to be, if the European and American governments continue to maintain or strengthen the blockade policy, it is bound to have a negative impact on the entire economic recovery and cast a shadow over the outlook for crude oil demand.
The recovery of crude oil supplies in Libya has far exceeded market expectations, and OPEC+ is ready to take action if necessary. Since mid-late September, Libya has gradually lifted force majeure from ports and oil fields, and crude oil production has increased from 155000 barrels per day in September to the current 1.2 million barrels per day, and Libya says it will not be subject to OPEC+ production reduction quotas until production returns to 1.7 million barrels per day. In view of the rapid recovery of crude oil supply in Libya and the current weak demand caused by the second outbreak, OPEC lowered its forecast for global crude oil demand in its latest monthly report, and the market is expected to postpone its plan to increase production in the first quarter of next year. The OPEC+ Joint Ministerial Monitoring Committee issued a statement in a videoconference last Tuesday that all participating countries must remain vigilant, proactive and ready to take action in response to market requirements if necessary, but did not give clear recommendations on whether to press ahead with the production plan as scheduled. The final decision will be made at the OPEC+ ministerial meeting from November 30th to December 1st.
There are signs of instability within OPEC, and the dispute between the United Arab Emirates and OPEC could weaken OPEC's influence. Tensions between the UAE and the OPEC are escalating, with UAE officials privately questioning the benefits of joining the oil-producing union and even considering whether to withdraw from the group. Although the UAE is trying to ease its dispute with the OPEC and has said through the media that it has always been a staunch member, it did not say whether the government is assessing its future identity within the organization. Not only in the United Arab Emirates, but also because of the sharp decline in oil revenue and the impact of the epidemic on the economy, OPEC member countries are facing varying degrees of financial crisis. It is unclear whether countries can make concerted efforts to reduce production to the bottom of the oil market. Any rift in the alliance is believed to have a major impact on the already fragile oil market.
Recently, the replenishment of crude oil in the Asia-Pacific region has increased significantly, and countries such as China, India and Japan are all increasing their procurement of crude oil. at present, the spot market of crude oil is selling well. From the driving force behind, China's procurement is driven by the georefining quota for the new year in 2021; the increase in Indian procurement comes from a strong recovery in domestic refined oil demand and refinery starts, while the increase in Japanese procurement mainly comes from winter coal you heating consumption. The strong east and the weak west on the demand side, to a certain extent, balance the current decline in demand in Europe and the United States and the increase in crude oil production in Libya, the long-term curve of crude oil is gradually smooth, and it is difficult to reproduce the situation of large accumulation of crude oil in the
Generally speaking, the international crude oil market will focus on the game between strong expectation and weak reality. Vaccine delivery, OPEC+ extension and production reduction and other good news have been included in the price. Back to reality, it will take time for vaccines to be put on the market, and the epidemic is still the sword of Damocles hanging in the crude oil market. On the other hand, the Asia-Pacific buying temporarily hedged the decline in demand in Europe and the United States and the increase in production in Libya, and there was no significant increase in global crude oil inventories, but it is not clear whether OPEC+ members will continue to cut production, and the potential negative side still exists. We believe that before the situation is clear, the real unilateral rising breakthrough market is difficult to form, and oil prices are likely to remain volatile.
